The Art of Unraveling the Deal

President Hassan Rouhani of Iran marked the one-year anniversary of the U.S. withdrawal from the Iran nuclear deal—formally known as the Joint Comprehensive Plan of Action (JCPOA)—with another blow to the agreement. While not withdrawing fully from the JCPOA, President Rouhani announced that Iran would no longer comply with its commitment under the agreement to limit its low-enriched uranium and heavy water stockpiles. In addition, he issued a 60-day ultimatum to the rest of the JCPOA signatories to reject U.S. unilateral sanctions against Iran and allow the country to “reap our benefits” promised by the deal. If the ultimatum is not met, Iran has threatened, in essence, to breathe life back into its nuclear program by restarting higher levels of uranium enrichment and resuming the construction of the unfinished Arak heavy water nuclear reactor. Such a step would bring about a definitive end to the hard-fought agreement, leaving Iran unchecked, uninhibited, and unpredictable—and thus a greater threat to the United States, its partners, and its allies.

The Doomed Deal

The landmark JCPOA was adopted in October 2015 and implemented in January 2016, the culmination of multiple years’ worth of negotiations between Iran and the P5+1 (China, France, Germany, Russia, the United Kingdom, and the United States). The deal focused primarily on Iran’s nuclear program, including provisions that essentially would put a temporary hold on the program until 2025. These provisions restrict what little uranium Iran is allowed to enrich at low levels, unsuitable for nuclear weapons, and also restrict stockpiles of low-enriched uranium to 300 kilograms and heavy water reserves to 130 metric tons, requiring Iran to sell or store the rest abroad. The International Atomic Energy Agency (IAEA) has verified Iranian compliance with these provisions to date. In return for Iranian compliance, the P5+1—primarily the United States—and the United Nations would relieve Iran of significant economic sanctions, including those that had previously targeted its nuclear program and its petroleum and banking sectors.

There was significant pushback against the signing of the JCPOA within the United States, as the deal selectively targeted Iran’s nuclear program but neglected to address other subversive activities threatening U.S. partners, allies, and interests, such as Iran’s ballistic missile development or the Islamic Revolutionary Guard Corps’ (IRGC) support for proxies and militias in Iraq, Syria, and Yemen. The Obama administration made it clear that the narrow nuclear focus of the deal was a function of necessity to constrain Iran’s nuclear ambitions; the JCPOA intentionally did not cover missiles, proxies, and other issue areas because that would have set up the negotiations for almost certain failure. Critics of the JCPOA included then-presidential candidate Donald Trump, who, along with his advisers, openly derided the deal and pledged to “renegotiate” it or even have it, as then Vice President-elect Mike Pence said, “ripped up” completely once he took office. True to the campaign pledge, the Trump administration finally withdrew from the deal in May 2018, enacting unilateral sanctions against Iran.

The remaining signatories scrambled to maintain the integrity of—and Iran’s adherence to—the JCPOA, including by attempting to circumvent the sanctions through a European special purpose vehicle, the Instrument in Support of Trade Exchanges (INSTEX) that would allow Europe-based companies to continue conducting transactions with Iran through a “central clearing house”-esque arrangement. INSTEX’s impact, however, is projected to be limited since many businesses remain too afraid to run afoul of the United States to use this workaround, and because INSTEX is focused primarily on essential goods such as food and pharmaceuticals.

With economic sanctions taking their toll despite the remaining JCPOA signatories’ best efforts, Iran has been facing increased pressure from its suffering population. This domestic pressure has been exacerbated due to two recent U.S. measures: designating the IRGC as a foreign terrorist organization for its financing and promotion of terrorism “as a tool of statecraft,” and ending waivers that had allowed certain countries to continue importing Iranian oil—including top importers such as China, India, and Turkey. The apparent final straw for Tehran was the U.S. deployment of the USS Abraham Lincoln carrier strike group and U.S. Air Force bombers to the Gulf, in reaction to a “credible threat by Iranian regime forces” to U.S. assets in the region. The deployment was announced on May 5, and just three days later, President Rouhani responded with the Iranian ultimatum.

Going Nuclear? Implications of Iranian Escalation

If the remaining parties to the JCPOA fail to deliver sanctions relief within 60 days, Iran has declared that it will take significant steps outside the bounds of the JCPOA, including restarting uranium enrichment to levels above the 3.67 uranium-235 level and resuming construction of the unfinished Arak heavy water nuclear reactor. Higher uranium enrichment levels can potentially be used in nuclear weapons, while heavy water can be used to help produce plutonium suitable for more advanced nuclear weapons. If Iran decides to break with the JCPOA and take these steps, it may shorten the time horizon for Iran to accumulate enough nuclear material to develop a weapon and essentially would reverse the limits of the JCPOA. These actions would not enable Iran to develop a nuclear weapon anytime soon, but they would renew pathways for Iran to pursue possible development of nuclear weapons that the JCPOA had temporarily stopped.

Iran is a non-nuclear weapon state party to the Nuclear Nonproliferation Treaty (NPT)—as pointed out in the EU response to Rouhani and reaffirmed through the JCPOA—and has, therefore, pledged not to manufacture, acquire, or seek nuclear weapons. Iran also adopted the Additional Protocol, which gives the IAEA legal authority to verify that nuclear material is only being utilized for peaceful purposes. If Iran decides to follow through with its threat and stops complying with the JCPOA constraints after the ultimatum elapses, it could take a more drastic step and withdraw from the NPT. This would have serious implications on the already strained nonproliferation regime as it heads into the 2020 NPT Review Conference. The only other state to withdraw from the NPT and eventually develop nuclear weapons was North Korea, which left the treaty in 2003. Between the downfall of the INF Treaty and concerns that New START will not be extended, the end of the JCPOA would be another blow to nuclear constraints and progress toward nonproliferation and arms control. This comes at a time when many non-nuclear weapons states and civil societies are frustrated with the slow progress of nuclear disarmament and are seeking to formally ban nuclear weapons through the Treaty on the Prohibition of Nuclear Weapons. The nonproliferation implications of Iran withdrawing from the NPT could significantly harm the standing of the treaty; encourage additional states to leave the treaty and would certainly call into question the decades of work toward preventing additional states from acquiring nuclear weapons.

Reactions from Iran, the European Union, and the United States

President Rouhani’s announcement comes as Tehran has keenly been feeling the economic strain of unilateral U.S. sanctions despite obeying the tenets of the JCPOA. The International Monetary Fund (IMF) estimates that Iran’s GDP shrunk by 3.9 percent last year and is projected to shrink by another 6 percent this year, while the value of the Iranian rial has fallen nearly 60 percent. Iran has also lost more than $10 billion in oil revenues, and oil exports have been cut in half over the last year. In addition to the economic pressure, Iran is also forced to navigate a significant catch-22 that could potentially impact its standing in the deal: Iran is required to sell or store uranium and heavy water reserves above the JCPOA-mandated threshold, but U.S. sanctions do not permit countries to purchase that surplus, thus inadvertently jeopardizing Iran’s standing in the JCPOA. However, the IAEA’s most recent quarterly report from February 2019 has indicated that Iran remains below the stockpile thresholds for both substances.

Ever since the U.S. withdrawal from the JCPOA, Iran has reaped very few of the benefits it was promised under the agreement. President Rouhani’s announcement signals how little incentive the country has to remain within the JCPOA fold, but the specific steps indicate a desire to maintain its status within the agreement and avoid additional “snapback” sanctions that would exacerbate Iran’s economic crisis. Based on past Iranian rhetoric and dealings, Rouhani’s ultimatum is likely an escalate-to-deescalate tactic in the hopes of alleviating pressure from the United States via European channels. While the European Union and the JCPOA signatories have reiterated their commitment to the deal, they have come out strongly against Rouhani’s demands, saying, “We reject any ultimatums and we will assess Iran’s compliance on the basis of Iran’s performance regarding its nuclear-related commitments under the joint comprehensive plan of action and the treaty on the non-proliferation of nuclear weapons.”

Meanwhile, in the United States, assertions about “troubling and escalatory indications and warnings” from Iran have met with some skepticism from experts and observers, who are worried that elements of the administration may be baiting Iran into a confrontation based on inflated reporting. On the other hand, in spite of the JCPOA, Iran has indeed engaged in an array of other coercive activity against the United States and its allies and partners—including proxy support, cited as one of the threats prompting the deployment of USS Abraham Lincoln.

Issues to Consider

The 60-days leading up to the ultimatum will be fraught for all parties involved:
The European signatories to the JCPOA have demonstrated the greatest commitment to the agreement and possess the best leverage in talking Iran off the ledge. However, they will have to take more significant steps than INSTEX to placate Iranian concerns and incentivize Tehran’s adherence to the JCPOA;

Regardless of action on the JCPOA, Iran is still party to the NPT and implementing the Additional Protocol, so the IAEA can still closely monitor all activities. Major concerns will arise if Tehran decides to move toward withdrawal from the NPT.

During this crucial period, it is imperative that cooler heads and diplomacy prevail. If there is a chance to return to the negotiating table and pen a more comprehensive deal, the United States should strive to pursue that pathway while continuing hold Iran accountable for its subversive actions against U.S. interests, allies, and partners.

Hijab Shah is a research associate with the International Security Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Sarah Minot Asrar is the associate director for the Project on Nuclear Issues at CSIS.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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Sarah Minot Asrar

Hijab Shah